The Only 2 Words an Innovator Needs to Know

Howard Tullman is the CEO of Chicago-based 1871, where, at the moment, 325 digital startups are building their businesses every day. He is also the general managing partner of G2T3V and Chicago High Tech Investors, both early-stage venture funds; a member of mayor Rahm Emanuel's ChicagoNEXT Innovation Council; and governor Bruce Rauner's Innovate Illinois Advisory Council. He is an adviser to many technology businesses and an adjunct professor at the Kellogg Graduate School of Management.

The key to successful and ongoing innovation is simple. You need a perfectly clear understanding of the two concepts that define the process: mistakes and failures. Understanding and discussing these two ideas correctly in every conversation about innovation is crucial to your focus, clarity and momentum.

Mistakes

If your culture makes your people afraid to talk about the likelihood of making mistakes, you’re never going to succeed. If we knew these things were all going to work out fine, they wouldn’t be tests and experiments - they’d be sure things. Just like at the horse races, sure things are safe and comforting, but they don’t pay squat when the race is done.

You need to make it O.K. to make mistakes, as long as they are quick and cheap, as long as you learn from them and as long as they’re original. You need to make your own mistakes, not repeat someone else’s.

The second important part of the conversation about mistakes is to have a process that identifies and categorizes systemic problems, and distinguishes them from mistakes. A mistake that happens over and over isn’t a mistake, and it’s obviously not random. It’s a problem that needs to be fixed.

Only a tiny number of businesses appreciate this distinction and work to find the specific causes of and cures for these problems. That’s a shame, because problems masquerading as mistakes cost substantial amounts of time, energy, and money, repeatedly, for no good reason. Eliminating these problems is just as important to improving your overall business processes as any new idea might be. After all, avoiding the potholes is a lot smarter and cheaper than getting a good deal from the guy towing your car to the garage to have your tire repaired.

Failures

Understanding how to talk about failures in the context of innovation is also simple to understand, but hard to consistently implement. For better or worse, bad examples are readily available and easy to find. People tend to approach failure in three ways, all of which are wrong:

On the West Coast, especially among people who are almost always investors, they claim to celebrate failure. They call it noble and a badge of honor. This is simply BS. To me, the idea of a noble failure is an oxymoron. True failures truly suck - there’s just no two ways about it.

Other folks refuse to accept the possibility of failure and choose to ignore it. This is stupid and short-sighted.

And yet, while regularly dumping on all these folks, I talk about and embrace failure all the time. So where’s the disconnect? It’s all in the language you use.

First and foremost, a failure isn’t the end. It may be the best you can possibly do under the circumstances. The real error is when you give up and stop trying. We never complain about failures - they’re merely approaches and ideas that didn’t work at the time. In our world, failure is just another word for education. We try to give our people permission to fail without an acceptance of failure. While effort is great, ultimately, it’s results that matter.

Every entrepreneur knows about the “J” curve, which shows that things tend to get worse for a while before they get better. That’s just part of the deal. So expect a bumpy road, but always keep moving the ball forward. Things will get better.

Our basic mantra is “fail, fail again, and fail better” - each time. Yet we are merciless about lack of effort or giving up too soon or too often.

The second and most critical part of the discussion about failure is to focus on failing fast. If you’re in a hole, stop digging. If you’re going sideways, bail out. You’ve got to remember that there’s an opportunity cost to everything. Whatever you’re doing, you could always be doing something else and something potentially more valuable to your business. So you’ve got to be downright greedy with your time, which is your scarcest resource of all, and very careful about how you spend it.

Saying “no” quickly and often helps immeasurably. There’s always too much to do and too many opportunities - saying “no” is your best strategic tool. And failing fast and smart is the methodology that makes this approach work.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.